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Hedge funds look to increase crypto exposure

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Bitcoin’s worth soared final 12 months, boosting the property of crypto hedge funds from $2 billion to $3.8 billion. Whereas the median return in 2020 amongst crypto hedge funds was 128% (in comparison with 30% in 2019), discretionary long-only funds carried out greatest with a median return of 294%, the report mentioned. Hedge funds with quantitative methods — the most typical, representing 37% of crypto funds — had a median return of 72%.

A number of cryptocurrencies surged earlier this 12 months however the previous month has been particularly unstable, with Bitcoin’s value down from a excessive above $60,000 to commerce beneath $40,000 on Tuesday.

Bitcoin was the most typical holding amongst crypto hedge funds (92%), adopted by Ethereum
(67%), Litecoin (34%), Chainlink (30%), Polkadot (28%) and Aave (27%), the report mentioned.

Past the crypto-focused funds, the survey discovered 21% of conventional hedge funds had some crypto publicity — a mean of three% of their complete property. The overwhelming majority (86%) of funds that held digital property deliberate to extend their publicity this 12 months, whereas roughly one-quarter of funds not at present invested in digital property mentioned they supposed to be.

The survey discovered regulatory uncertainty to be the best barrier (82%) for managers, adopted by shopper response or reputational danger (77%) and digital property falling exterior the scope of funding mandates (68%).

Henri Arslanian, PwC’s crypto chief, mentioned he expects inflows into crypto hedge funds to extend over the approaching months.

“For a lot of institutional buyers, an allocation to a crypto hedge fund is the pure first step of their crypto journey because it permits them to look at and be taught concerning the asset class by way of a car and construction they’re acquainted and cozy with,” Arslanian mentioned in a launch.

The median administration charge for crypto hedge funds final 12 months was 2%, with a 20% efficiency charge.


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